Copper moves up

Copper edged up on Thursday, bouncing from earlier losses as the dollar pared gains versus the euro, but with prices losing a grip of this week's record high. The market kept a keen eye on the demand outlook in China, after an interest-rate hike in the top base metals consumer on Tuesday.
Three-month copper on the London Metal Exchange traded closed at $9,951 a tonne, against a close of $9,925 on Wednesday and after striking a record high of $10,160 on Monday. "Copper's...a bit overheated for the moment," VTB Capital analyst Andrey Kryuchenkov said, adding concerns about Chinese demand had dented copper after the rate hike. "For a sustained push over $10,000 you'll need China coming back and restocking," he said. It was the second Chinese rate hike in just over six weeks as the government intensified a battle to quell high inflation in the fast expanding economy.
Helping metals bounce, the dollar pared gains versus the euro. A stronger US dollar deters non-US investors. The dollar was little affected by news reports that Egypt's president may step down imminently. Copper prices have risen around 3 percent since the beginning of January, supported by generally positive economic data, which suggested stronger demand for a metal that is in short supply.
The metal earlier erased losses briefly, to trade flat, after data showed US claims for unemployment benefits dropped more than expected last week. Copper prices remained high enough to deter physical demand for the metal, as consumers work through surplus Chinese inventory. More supply could be on tap. Chile, the world's top copper producer, moved to head off an energy squeeze due to a prolonged drought.
Global miner Rio Tinto said it would continue to focus on its expansion projects, after approving $12 billion worth of work last year. Further denting confidence in demand, stocks of copper in LME warehouses last rose 550 tonnes to 396,950 tonnes, continuing a recent trend.
Reflecting moribund physical demand, the ratio of stocks to cancelled warrants - the metal tagged for removal from warehouses - has fallen near 3 percent, the lowest levels since April 2010. Aluminium stocks rose 1,125 tonnes to within reach of a record of around 4.6 million tonnes. The metal closed at $2,537 a tonne, from $2,546 at the close on Wednesday.
"We expect the uptrend for the (base metals) sector to remain intact and prices to pick up once exchange warehouses start to show outflows again," Credit Suisse said in a note. Zinc was at $2,448 a tonne from $2,458 at the close, feeling some pressure after minerals shipments at Peru's main port were back to normal on Wednesday after workers ended a strike. Peru produced 1.47 million tonnes of zinc concentrate last year. Tin closed at $31,500 a tonne from $31,255, while nickel was at $27,875 a tonne from $28,375. Lead was at $2,510 a tonne from $2,250 at the close on Wednesday.